The IRDAI circular benefits both customers and the insurance sector

The recent circular of the Insurance Regulatory and Development Authority of India (IRDAI) specifying the procedure for early discharge of patients and diversification of insurance products will go a long way in increasing customer satisfaction and improving the efficiency of the health insurance sector. The insurance regulator has stipulated that insurers must give final approval within three hours of receiving a hospital discharge request. This is a key step towards improving the claims settlement process. Dealing with insurance companies or third-party administrators (TPAs) – those who act as intermediaries between insurance companies, insured persons and hospitals – is often a painful and stressful experience for patients and their families. A survey by Local Circles found: “In several cases cited by policyholders on Local Circles, by the time a patient was ready for discharge, actual discharge took 10-12 hours because the health insurance claim was still pending. If the patient stays in the hospital another day, the cost of the additional stay will increase the burden on the family.”

We hope that the IRDAI circular will improve the lives of patients and their families. This, of course, depends on solid infrastructure and effective coordination between hospitals, insurers and regulators. This requires investment by insurers in technology-enabled systems that can process claims quickly and adhere to regulatory guidelines.

At the same time, hospitals must maintain accurate records and improve their communication channels to speed up the transfer of discharge requests. Regulatory oversight can monitor compliance and address lapses, but ultimately it is up to stakeholders to do their part to effectively implement the IRDAI directives. Meanwhile, the industry’s reaction to the circular varied from neutral to positive. According to Narendra Bharindwal, vice-president of the Indian Association of Insurance Brokers, “Policies must be portable and insurance policies should not discriminate against any particular group. The goal is to maintain high standards of customer service, ensuring an atmosphere of trust and transparency in health insurance.” Bajaj Capital Insurance Broking CEO Venkatesh Naidu is upbeat: “This directive aims to reduce the anxiety and financial stress often associated with medical emergencies… This move is particularly beneficial in critical situations where every minute counts. The regulator is strengthening its role as guardian of policyholder interests and as a catalyst for positive change in the sector.”

IRDAI’s emphasis on diversification of insurance products is also a good move. By offering a wide range of products tailored to different age groups, regions, professions and conditions, insurers can not only gain greater market share but also increase the size of the market itself. However, the dissemination of insurance products must be carried out in accordance with ethical standards, avoiding mis-selling and non-transparency of product offers. Insurers should clearly define the terms, coverage and exclusions associated with each policy to enable consumers to make informed decisions. Furthermore, regulators must closely monitor the market to detect any cases of unfair practices or exploitation of vulnerable segments. For their part, the authorities must ensure that the burden of compliance does not become too burdensome for insurers. They must strike a balance between the interests of insurers and customers.